The Best Credit Cards of 2012
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I spend a lot of time during the year reading credit card agreements and combing through the fine print. So when it’s time to pick the top credit cards of the year, it isn’t difficult to put together a list of candidates for each category.
Believe me, the really good ones stand out. But narrowing down the list and picking the winner isn’t always easy. When I pick my favorite card for a category, I consider a lot of different things. Sure, I look at the interest rate, but I also consider the rewards, customer satisfaction, benefits, and more.
So after careful consideration, here’s my list of the top credit cards of 2012. As is usually the case, the top cards are reserved for those who have excellent credit. A lot of these “top credit card” lists don’t include the cards that are available to those with bad credit. I think this is a terrible oversight because so many folks are still recovering from the recession and trashed credit scores.
So I decided to include winners for the “Best Card for Bad Credit” and the “Best Secured Credit Card.” When you don’t have terrific credit, it’s really difficult to find a decent card. I hope my choices can help you rebuild your credit in 2013.
Okay, let’s get to the winners. We’ll start with the top dog, so pretend you hear a drum roll.
Credit Card of the Year: Chase Sapphire Preferred® Card
It’s difficult to pick the credit card version of “Best in Show” because credit cards tend to fit into specific categories, such as travel or cash back. They aren’t really designed to target every demographic out there.
But I think the Chase Sapphire Preferred® Card is one of those rare cards that really does do a good job of appealing to a wide population. This card has a great overall combination of rewards, sign-up bonus, and features of all the cards I’ve reviewed this year.
Let’s take a close look at this card, starting with the outstanding sign-up bonus. When you spend $3,000 within the first three months, you earn 40,000 bonus points, which is worth $500 toward travel rewards.
You get two points per dollar spent on travel and dining and one point on everything else. Here are a few more of my favorite things about this card:
- Earn three points per dollar when you book travel and hotel accommodations via the Chase Ultimate Rewards booking tool.
- Get 20% off when you redeem points to book travel (airfare, hotel, car rentals, and more) via the Chase Ultimate Rewards booking tool (for example, a $400 flight requires 32,000 points instead of 40,000).
- Get an annual 7% dividend on points earned for the year.
- There are no foreign transaction fees.
- The annual fee is waived for the first year.
- You have access to a 24/7 concierge service.
The annual fee is $95, which is a bit high, I know. Some credit card geeks scoff at all annual fees, but not me. I’ll pay a fee if the rewards far outweigh the costs of the card. And in my opinion, this card is worth the fee if you do a decent amount of traveling.
Obviously, you can redeem points for travel and dining, but you can also redeem them for cash back, gift cards, merchandise, and even experiences, such as hot-air balloon rides. See what I mean? There’s something for everyone. Really, this is a terrific credit card.
Best Airline Miles Credit Card: Capital One® Venture® Rewards Credit Card
This is one of the most popular cards out there. The witty “What’s in Your Wallet?” commercials have made this card a household name. Often, products don’t live up to the hype. But this really is one of those times when the card lives up to the marketing.
It doesn’t pretend to be fancy. It just promises unlimited double miles, every day, and it delivers. The rewards are simple and easy to redeem. There are no foreign transaction fees, and the $59 annual fee is waived for the first year.
Best Airline-Branded Credit Card: Southwest Airlines Rapid Rewards® Plus Credit Card — Free Flight
Any credit card with a free flight gets my attention. You earn 25,000 bonus points when you spend $1,000 within the first three months, which equals $400 on a “Wanna Get Away?” fare. Okay, that’s just plain awesome.
Now, there are people who totally love Southwest, and there are those who don’t because they don’t like the boarding process or the lack of first-class seating. This is an individual thing. There’s a $69 annual fee, but if you love Southwest, the rewards are worth the fee.
Best Cash Back Credit Card: Blue Cash Preferred® Card from American Express
I’ll tell you a secret. The Blue Cash Preferred® Card from American Express is my runner-up for credit card of the year. Yes, it’s that good.
You get 6% cash back on up to $6,000 in grocery purchases at US supermarkets. After you reach $6,000 in purchases, you get 1% on groceries. You also get 3% at US gas stations, 3% at select US department stores, and 1% on other purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit.
There's a 0% intro APR on purchases and balance transfers for 15 months. After that, the variable APR ranges from 12.99% (not bad!) to 21.99% (ugh!). There’s also a $75 annual fee, but really, the rewards outweigh the costs by far. Assuming, of course, that you never, ever carry a balance.
- Get $150 back after you spend $1,000 on purchases on your new Card in your first 3 months. You will receive $150 back in the form of a statement credit.
- Hassle-free cash back: no enrollment required, the same great reward categories year-round.
- Earn Cash Back: 6% US supermarkets up to $6,000 per year in purchases, 3% US gas stations & select US dept stores, 1% on other purchases. Terms and limitations apply.
- Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit.
- A credit card that gives you cash back with a 0% Intro APR Offer on purchases and balance transfers for 15 months.
- After that, your APR will be a variable rate, currently 12.99%-21.99% based on your creditworthiness and other factors.
- Terms and restrictions apply.
Best Low-Interest Card: Simmons First VISA Platinum Credit Card
Along with exceptional customer service, you get an amazing 7.25% variable APR. That’s not an intro rate, and that’s not a typo. Not bad, huh?
The only “catch” with this card is that you must have really, really excellent credit. But if you qualify, this is a great credit card to have on hand for those inevitable emergencies that crop up. You know what I’m talking about. Your kid breaks his retainer, the car needs new tires, your house finally needs a new roof.
It’s never, ever a good idea to carry a balance. But there are times when life gets awful messy and it’s good to have a low-interest credit card on hand.
Best Balance Transfer Credit Card: Citi Simplicity® Card
If you’re in credit card debt, transferring your balance to a credit card with a zero percent intro offer can save you a lot of money. There are some good options on the market right now, but I like the Citi Simplicity® Card.
You get an 18-month zero percent APR on both balance transfers and on purchases. There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater, but most likely, you’ll still come out way ahead because you’ll save a ton on interest expense.
This card gives you 18 months to pay off your debt. Although this card does offer an intro rate for purchases, I suggest you focus on paying off the debt. Try to resist the urge to use this card for purchases and throw all your extra money at the debt.
After the intro period ends, you’ll get a regular rate between 12.99% and 21.99%. This card is also a bit forgiving if you make a late payment. There are no late fees or penalty fees.
Bonus pick: If you’re sure you can pay your debt off in 15 months, take a look at the Chase Slate credit card. With this card, you don’t have to pay the balance transfer fee if you make the transfer with 60 days.
Best Credit Card for Bad Credit: Capital One Cash Rewards for Newcomers
It’s tough to find an unsecured card for bad credit that isn’t trying to pick your pocket with loads of fees. This card is designed for immigrants, but anyone can apply for this card.
The APR is 24.9%, and I know that sounds like a lot. But it’s pretty average for this category. What makes this card better than the others is that you get rewards. You get 2% cash back on travel and 1% cash back on everything else. And since it’s from Capital One, there are no foreign transaction fees.
If you’re careful, you can use this card to rebuild credit. Make purchases and earn rewards, but don’t carry a balance. In 12 to 18 months, you might qualify for a credit card with a lower interest rate.
Best Secured Credit Card: Citi Secured Mastercard
This category has several good choices, but my pick is the Citi Secured MasterCard. Citibank invests your deposit in an 18-month Certificate of Deposit (CD) savings account. You get a regular rate of 18.24% (variable), and the annual fee is $29 per year.
The downside of this card is that you have to apply in person at a branch, and I know that’s inconvenient. But this card is a good way to rebuild credit. There’s also the possibility of qualifying for an unsecured card from Citi after 18 months of responsible use.
Now, I’m making a bonus pick in this category because if you’re associated with the military, you need to check out the Navy Federal nRewards Secured credit card. This card offers a variable 8.99% APR on purchases.
You also get rewards that you can redeem for gift cards and merchandise. You get 1 point for every dollar spent. This truly is a great card for either establishing or rebuilding credit.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.